We're underway with Merck's year-end conference call, live:
▲ Ken Frazier remains "confident" about Isentress, despite Gilead's news this morning -- Gilead is still many years away from any launch. There was some stocking effect in the sales, in Q4 2009 -- especially Januvia.
▲ Seamus Fernandez, at Leerink Swann -- foreign exchange benefits (at the revenue line) were up by one percent (Q4 2009), about the same at the EPS line -- all due to a "New Merck" currency hedging progam (something Schering-Plough didn't generally do much of).
▲ Saphris sales in Q4 2010 were only $40 million, worldwide -- that is very weak.
▲ Billy Tauzin comment from CEO Clark: Same strategy at PhRMA -- it's just a "new guy", at the helm -- Billy will stay on as a consultant to PhRMA. [Ed. Note: Fabulous. Not.]
▲ Morgan Stanley's David Reisinger: comment on CEO replacement planning (for early 2011)?: CEO Clark feels it is his most important priority -- in pretty good shape from an "internal candidate" perspective.
▲ Update on Remicade/Simponi arbitration -- hearing scheduled late September 2010, already met with the entire aritration panel, per Ken Frazier. No repsonse on the question about possible negotiated settlement talks -- with J&J.
▲ Jami Rubin, at Goldman Sachs -- what is going on with Consumer Health businesses -- what is the chance of spin-off [Ed Note: Huzzah!]? Also -- is the $3.5 billion savings gross or net? Kellog: Net figure of #3.5 billion.
Kellog's answer: On Consumer Health, and transaction possibilities -- we are "looking forward to putting a strategy together" for Consumer Health. That's a non-answer -- a "no comment", dressed up as an evasive answer.
▲ JP Morgan's Chris Schott (phonetic) asks about R&D budgets, beyond 2010 (will the size be reduced?), and the absolute size of the R&D spend -- it is in danger of continuall-growing out of scope, and unmanagable. CEO Clark answers that Merck is organizing R&D "by franchise" -- by disease, or markets. CFO Kellog offers a non-answer.
▲ Clearly Q1 2010 EPS will be weak, given CFO Kellog's remarks.
▲ 2010 earnings will be significantly "back-end loaded" in 2010, per Merck CFO Peter Kellog.
▲ Temodar patent invalidity judgment "disappointing" to Merck -- it will see generic competition soon, despite Merck's having filed an appeal, and seeking a preliminary injunction.
▲ High single digit compound annual growth in non-GAAP EPS, for the next four years, but 2010 won't be as strong -- as the mulit-year average CAGR -- due to patent expiries, and 2010 post-treansaction merger expenses.
▲ Legacy Schering-Plough's foreign exchange exposures hurt results -- primarily Euro and Japanese Yen -- moderated by new hedging efforts at New Merck.
▲ New Merck had published this, on January 10, 2010: "With respect to the arbitration with Centocor, a wholly-owned subsidiary of Johnson & Johnson, the arbitration panel has recently been selected. Since the selection, the parties have met with the panel and the hearing in this matter has been scheduled for late September 2010. . . ."
No breakdown on Saphris sales in Q4 2010 in the release. Odd.